Slide 1: Results of mBank Group Q1-Q4 2013
Results of mBank Group Q1-Q4 2013 Delivering on our promises Management Board of mBank S.A. Investor Presentation February 6, 2014
Slide 2: Key highlights of 2013
Key highlights of 2013 Solid results despite earnings headwinds • NII lower by only 2.4%, despite Net Profit of PLN 1,206 M … 175 bps base rate reduction • NFC up by 6.1%, despite Profit & Loss interchange cut Sound volume growth Further improving efficiency • Gross customer loans at PLN 70.6 B (+1.
Slide 3: 2013/2014 – Strategic Agenda
2013/2014 – Strategic Agenda Delivering the strategy 2013 2014 "One Bank Strategy" on track: • mBank Hipoteczny to issue Poland’s first residential • Launch of New mBank mortgage backed covered bonds • Group rebranding • Migration of MultiBank clients onto New mBank • Balance sheet management platfo
Slide 4: Agenda
Agenda mBank Group in 2013 Summary of Q4/13 Analysis of Q4/13 Results Macroeconomic Update & Outlook Appendix Additional Information: Selected Financial Data Detailed Results of Business Lines |4
Slide 5: mBank Group in 2013: Summary of Key Financials
mBank Group in 2013 mBank Analyzer Summary of Key Financials in PLN M 2011 2012 2013 Change ‘13/‘12 Net interest income 2,167 2,280 2,226 -2.4% Net Fee & Commission income 840 787 835 +6.1% Total income 3,521 3,571 3,674 +2.9% Total costs (1,680) (1,661) (1,678) +1.0% Loan Loss Provisions (373) (445
Slide 6: Development of Revenues and Costs
mBank Group in 2013 mBank Analyzer Development of Revenues and Costs Development of Total Income Development of Total Costs (PLN M) (PLN M) +2.9% change 47.7% 46.5% 45.7% change +1.4% 3,674 ‘13/‘12 ‘13/‘12 3,571 -1.1% +1.0% 3,521 505 613 1,680 1,661 1,678 514 +21.5% 88 95 +2.5% 93 209 196 188 840 78
Slide 7: Development of Loans and Deposits
mBank Group in 2013 mBank Analyzer Development of Loans and Deposits Development of Gross Loans Development of Deposits (PLN M) (PLN M) +2.8% +1.7% change change +1.6% ‘13/‘12 +6.4% ‘13/‘12 -1.1% +6.9% 70,240 70,582 61,674 69,475 2,799 57,984 718 3,661 3,366 -16.9% 54,244 501 +43.2% 528 29,475 26,75
Slide 8: A more diversified funding base supporting a higher margin asset mix
mBank Group in 2013 A more diversified funding base supporting a higher margin asset mix Evolution of Funding mix Development of Gross Loans by type 100% (31.03.2009=100) 205 Other 190 80% Subordinated debt 175 160 60% Debt securities in issue 145 130 40% Medium & long-term funding * 115 100 20% Cor
Slide 9: Growth Potential
mBank Group in 2013 Rebranding Award-winning platform Growth Potential Full breath of highest- Has set the standards for demanding quality services for of state-of-the-art, affluent clients who corporate and comfortable and friendly appreciate high quality private banking retail banking service and
Slide 10: Launch of New mBank
mBank Group in 2013 Launch of New mBank Beginning – what built mBank’s DNA? Now – how are we reinventing ourselves? • First-mover — while broadband penetration was at 1% • Fast decision-making embedded culture of households • Flat structure — IT project-based, deep business-IT • "Young" team — givin
Slide 11: Awards & Distinctions
mBank Group in 2013 Awards & Distinctions Awarded twice with "Best of Show" #1 for the best institutions Recognized as “The Best Global and prize at FinovateEurope conference in offering mobile banking; CEE Corporate/Institutional Internet London and FinovateFall in New York #2 among traditional ban
Slide 12: Share performance summary
mBank Group in 2013 Share performance summary mBank’s index membership and weights* mBank’s share performance v. main indices (rebased to 100) 180 WIG-30 3.50% 170 WIG-20 3.72% 160 +53.4% WIG 2.19% 150 WIG-Banks 7.02% 140 130 +25.9% WIG-Poland 2.21% 120 MSCI Emerging Markets 0.07% +20.5% 110 • Liste
Slide 13: Agenda
Agenda mBank Group in 2013 Summary of Q4/13 Analysis of Q4/13 Results Macroeconomic Update & Outlook Appendix Additional Information: Selected Financial Data Detailed Results of Business Lines |13
Slide 14: Summary of Q4/13 Results: Key Financials
Summary of Q4/13 Results in mBank Group mBank Analyzer Key Financials in PLN M Q4/13 Q3/13 Change Q4/Q3 Q4/12 Net interest income 588.1 570.0 +3.2% 569.0 Net Fee & Commission income 228.9 210.7 +8.6% 185.7 Total income 964.2 945.0 +2.0% 826.8 Total costs (441.6) (416.8) +6.0% (434.0) Loan Loss Provi
Slide 15: Development of Loans to Customers
Summary of Q4/13 in mBank Group mBank Analyzer Development of Loans to Customers A stable credit portfolio across products Development of Gross Loans (PLN M) +1.6% +1.7% -1.9% QoQ YoY 74,426 -0.8% 2,861 71,968 70,582 69,475 69,060 2,901 2,799 4% 3,366 5% 3,017 -3.5% -19.6% 32,523 30,211 28,405 27,92
Slide 16: Development of Deposits
Summary of Q4/13 in mBank Group mBank Analyzer Development of Deposits Expanding deposit base despite continued re-pricing Development of Deposits (PLN M) +6.4% +1.7% +2.6% QoQ YoY +0.6% 62,195 61,674 1,155 60,085 57,984 58,532 718 854 1% 501 1% 794 -16.0% +43.2% 22,647 27,351 26,753 24,249 42% 26,6
Slide 17: Funding structure details
Summary of Q4/13 in mBank Group Funding structure details Further diversification continues mBank Group’s funding structure mBank’s ratings mBank Group’s funding strategy as of December 31, 2013 Fitch • Funding needs reduced by CHF loan book Retail repayments (c. CHF 350-400 M per annum) Other 36% d
Slide 18: Business Development: Corporates & Financial Markets
Summary of Q4/13 in mBank Group Business Development: Corporates & Financial Markets Corporate lending yet to experience a meaningful acceleration Loans (PLN M) Deposits (PLN M) +3.8% +10.3% -2.4% +0.4% 28,405 30,211 29,475 26,636 26,753 1,937 1,634 Other 24,249 1,568 3,717 3,787 4,281 3,733 3,800 m
Slide 19: Business Development: Retail Banking
Summary of Q4/13 in mBank Group Business Development: Retail Banking Business growth towards improving margins Loans (PLN M) Deposits (PLN M) +1.6% +2.9% -1.4% +4.9% 37,704 38,855 38,308 33,234 32,595 34,203 53 40 54 8,610 9,596 9,615 12,122 8,045 9,889 3,636 3,937 4,206 Other Non-mortgage loans 12,
Slide 20: Agenda
Agenda mBank Group in 2013 Summary of Q4/13 Analysis of Q4/13 Results Macroeconomic Update & Outlook Appendix Additional Information: Selected Financial Data Detailed Results of Business Lines |20
Slide 21: Income of mBank Group
Analysis of Q4/13 Results mBank Analyzer Income of mBank Group Outstanding revenue dynamics Development of mBank Group’s Income (PLN M) +16.6% +2.0% QoQ YoY 945.0 964.2 932.9 33.7 32.5 46.9 25.3 826.8 831.4 36.2 16.3 78.4 3.1 86.3 9.8 76.1 51.4 102.5 0.8 14.8 0.0 75.8 2.3 -9.1% +3.1% 0.0 228.9 185.7
Slide 22: Costs of mBank Group
Analysis of Q4/13 Results mBank Analyzer Costs of mBank Group Cost containment on track Development of mBank Group’s Costs (PLN M) +1.8% +6.0% QoQ YoY 441.6 of which 434.0 417.9 416.8 25.2 new BFG 22.7 401.7 rescue fee: 24.0 20.1 51.4 26.0 52.0 PLN 4.6 M 45.6 45.4 +25.1% +10.9% 44.8 149.9 153.4 132.
Slide 23: New Impaired Loan Definition in Retail segment
Analysis of Q4/13 Results New Impaired Loan Definition in Retail segment A change towards a more conservative NPL recognition mBank Group’s Impaired Loans Portfolio Q4/13 (PLN M) -1.7% In Q4/13 the Group modified its impairment -6.8% credit risk parameters as part of its AIRB 4,424 3,632 3,641 3,645
Slide 24: Loan Portfolio Quality
Analysis of Q4/13 Results Loan Portfolio Quality Risk indicators influenced by methodological modifications NPL Ratio and Coverage Ratio of Corporate Portfolio* The increase in the NPL ratio and lowered coverage ratio results from a methodology change towards a Coverage ratio 55% more conservative c
Slide 25: Loan Loss Provisions & Risk Costs
Analysis of Q4/13 Results Loan Loss Provisions & Risk Costs Normalization of LLP levels Net Impairment Losses on Loans and Advances mBank Group’s Cost of Risk by Segment (PLN M) (bps, quarterly) 2013 CoR CoR Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 173.6 70 bps mBank Group 52 17 92 98 68 159.5 Retail Banking 8
Slide 26: Key Regulatory Ratios
Analysis of Q4/13 Results Key Regulatory Ratios Safe levels of capital and liquidity mBank Group’s Capital Adequacy Ratio mBank’s LCR and NSFR 19.2% 19.4% 208% 18.7% 18.9% 18.2% 187% 16.2% 5.2% 5.2% 177% 173% 5.7% 5.4% 5.1% 5.0% 146% 118% 116% 112% 111% 113% Basel 3 requirement ≥100% 13.5% 14.0% 14.
Slide 27: Detail Development of Core Tier ratio and CAR
Analysis of Q4/13 Results Detail Development of Core Tier 1 ratio and CAR Capital ratios under Basel III significantly surpass regulatory requirements mBank Group’s Core Tier 1 Ratio Basel III 1 (implementation of CRR/CRD IV) Application of the new criteria to own funds: current profits are +0.98 14
Slide 28: Agenda
Agenda mBank Group in 2013 Summary of Q4/13 Analysis of Q4/13 Results Macroeconomic Update & Outlook Appendix Additional Information: Selected Financial Data Detailed Results of Business Lines |28
Slide 29: Macroeconomic Update (1/2)
Macroeconomic Update (1/2) The recovery strengthens. Inflation nowhere in sight. GDP forecast – mBank v. market consensus (% YoY) Trade balance and current account balance as % of GDP 5 2% 4 0% 3 -2% 2 -4% 1 -6% 0 -8% Q1'11 Q3'11 Q1'12 Q3'12 Q1'13 Q3'13 Q1'14 Q3'14 Q1'15 Q3'15 2001 2002 2003 2004 20
Slide 30: Macroeconomic Update (2/2)
Macroeconomic Update (2/2) Green shoots in bank credit; cash flows boost retail and corporate deposits Corporate loans and deposits (% YoY) Household loans and deposits (% YoY) 40% 70% 60% 30% 50% 20% 40% 10% 30% 20% 0% 10% -10% 0% -20% -10% Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Ja
Slide 31: 2014 in forecasts and the impact on mBank Group
2014 in forecasts and the impact on mBank Group Macroeconomic environment and challenges for the banking sector Key economic indicators Impact on mBank 2013 2014F Net interest income & NIM (Mildly positive) GDP growth (YoY) 1.6% 3.5% • Continued change in asset mix supporting margins Domestic demand
Slide 32: Agenda
Agenda mBank Group in 2013 Summary of Q4/13 Analysis of Q4/13 Results Macroeconomic Update & Outlook Appendix Additional Information: Selected Financial Data Detailed Results of Business Lines |32
Slide 33: Appendix
Appendix Page Page Additional Information: Selected Financial Data No. Detailed Results of the Business Lines No. Consolidated Profit and Loss Account under IFRS 34 Retail Banking 49-56 Details of restatement due to the changes in bancassurance 35 Summary of Q4/13: Financial Results 50 Consolidated
Slide 34: Consolidated Profit and Loss Account under IFRS
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer Additional Information: Selected Financial Data Subsidiaries Business Lines Consolidated Profit and Loss Account under IFRS PLN thou., by quarter Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Net interest income 569,024 517,483 550,232 570,
Slide 35: Adjustments resulting from the changes in bancassurance treatment
Summary Appendix Historical view Profit & Loss Balance Sheet Adjustments resulting from the changes in bancassurance treatment Subsidiaries Business Lines Details of restatement in Consolidated Profit & Loss Account Q4/12 Q1/13 Q2/13 Q3/13 in PLN thou. previous ∆ restated previous ∆ restated previou
Slide 36: Consolidated Statement of Financial Position
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer Additional Information: Selected Financial Data Subsidiaries Business Lines Consolidated Statement of Financial Position Assets (PLN thou.) Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Cash and balances with Central Bank 4 819 203 2 493 40
Slide 37: mBank Group's Ratios
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Subsidiaries Business Lines mBank Group’s Ratios Financial Ratios Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Net Interest Margin YtD 2.43% 2.08% 2.14% 2.16% 2.20% Net Interest Margin YtD (excl. CHF portfo
Slide 38: mBank Group's historical performance (1/3)
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer mBank Group’s historical performance (1/3) Subsidiaries Business Lines Net Interest Income & NIM Net Fee and Commission Income (PLN M) (PLN M) 2.3% 2.3% 2.2% 2.5% 2.4% 2.2% +9% +6% CAGR +10% -2% CAGR 840 787 835 746 2,167 2,
Slide 39: mBank Group's historical performance (2/3)
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer mBank Group’s historical performance (2/3) Subsidiaries Business Lines Operating Costs Pre-provision Income & C/I ratio (PLN M) (PLN M) +2% +1% 55.1% 54.2% 51.8% 47.7% 46.5% 45.7% CAGR +12% +5% CAGR 1,550 1,545 1,617 1,680 1
Slide 40: mBank Group's historical performance (3/3)
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer mBank Group’s historical performance (3/3) Subsidiaries Business Lines Total Assets Equity & CAR (PLN B) (PLN M) +5% +2% 10.04% 11.50% 15.90% 14.96% 18.73% 19.38% CAGR +20% +7% CAGR 98.9 102.1 104.3 82.6 81.0 90.0 9,619 10,2
Slide 41: Net Interest Income & Margin
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer Additional Information: Selected Financial Data Subsidiaries Business Lines Net Interest Income & Margin Interest Income Structure Interest Expense Structure (PLN M) (PLN M) 2.4 2.1 2.1 2.2 2.2 NIM 604.5 1,173.6 12.4 15.6 53
Slide 42: Fee and Commission Income
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer Additional Information: Selected Financial Data Subsidiaries Business Lines Fee and Commission Income Fee and Commission Income Structure (PLN M) QoQ YoY 344.8 331.2 331.8 47.4 14% +11.4% +63.9% 299.6 296.1 41.2 42.5 28.9 25
Slide 43: Trading and Other Income
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer Additional Information: Selected Financial Data Subsidiaries Business Lines Trading and Other Income Net Trading Income Structure Gains less Losses from Investment Securities (PLN M) (PLN M) +3% 102.5 +720% -9% 86.3 36.2 28.
Slide 44: Balance Sheet Analysis: Assets & Liabilities
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer Additional Information: Selected Financial Data Subsidiaries Business Lines Balance Sheet Analysis: Assets & Liabilities Structure of Assets Structure of Liabilities (PLN B) (PLN B) 108.1 108.1 103.1 4.6 104.0 104.3 103.1 10
Slide 45: Balance Sheet Analysis: Currency Structure
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer Additional Information: Selected Financial Data Subsidiaries Business Lines Balance Sheet Analysis: Currency Structure Currency Structure of Loans to Customers (net) Currency Structure of Amounts due to Banks and Customers*
Slide 46: Balance Sheet Analysis: Structure of Loans and Deposits
Summary Appendix mBank Historical view Profit & Loss Balance Sheet Analyzer Additional Information: Selected Financial Data Subsidiaries Business Lines Balance Sheet Analysis: Structure of Loans and Deposits Structure of mBank Group’s Gross Loans Structure of mBank Group’s Deposits as of December 31
Slide 47: Balance Sheet Analysis: Loan Portfolio Structure
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Subsidiaries Business Lines Balance Sheet Analysis: Loan Portfolio Structure mBank Group’s Sector Exposure by Industry as of December 31, 2013 Households Real estate management 19.3% Construc
Slide 48: Results of Subsidiaries
Summary Appendix Historical view Profit & Loss Balance Sheet Additional Information: Selected Financial Data Subsidiaries Business Lines Results of Subsidiaries Profit before Tax of Consolidated Subsidiaries (PLN M) 64.4 61.6 58.6 Q4 18.3 Q1-Q3 13.0 51.0 12.9 17.7 25.0 45.7 48.6 20.4 46.1 16.7 18.0
Slide 49: Detailed Results of the Business Lines: Retail Banking
Summary Appendix Historical view Profit & Loss Balance Sheet Subsidiaries Business Lines Detailed Results of the Business Lines Q4/13 Retail Banking |49
Slide 50: Retail Banking: Summary of Q4/13 Financial Results
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Subsidiaries Business Lines Summary of Q4/13: Financial Results Profit before Tax of Retail Banking Segment* Number of Retail Outlets (PLN M, by quarter) +49.2% 262 258 258 260 261 +13.2% 35 35 35 35 35 26 23 23 24 24 254.3
Slide 51: Sales of New Retail Loans
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Subsidiaries Business Lines Sales of New Retail Loans Quarterly Sales of Mortgage Loans Quarterly Sales of Non-Mortgage Loans (PLN M) (PLN M) -2% +10% -3% +114% 972.6 641.5 917.7 928.4 49.0 928.9 901.2 34.3 41.4 51.7 583.7 6
Slide 52: Mortgage and Non-mortgage Loans: Portfolio Structure and Key Parameters
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Subsidiaries Business Lines Mortgage and Non-mortgage Loans: Portfolio Structure and Key Parameters mBank’s Mortgage Loan Portfolio Currency Structure of Retail Banking Mortgage Loan Portfolio (Loans to individuals of Retail
Slide 53: mBank in the Czech Republic and Slovakia
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Subsidiaries Business Lines mBank in the Czech Republic and Slovakia Business development and initiatives: Gross Loans (PLN M) Deposits (PLN M) • Continuation of ambitious growth +20% +11% strategy derived from Polish +6% 2,
Slide 54: mBank in the Czech Republic and Slovakia: Market shares
Summary Appendix Historical view Profit & Loss Balance Sheet Retail Banking Subsidiaries Business Lines mBank in the Czech Republic and Slovakia Market shares – mBank CZ 1.32% 1.12% 1.13% 1.03% 0.95% 0.80% 0.26% 0.31% 2012 2013 2012 2013 2012 2013 2012 2013 Retail deposits Retail loans Mortgage loan
Slide 55: mBank Hipoteczny (mBH)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Retail Banking Subsidiaries Business Lines mBank Hipoteczny (mBH) Loan Portfolio: Balance-sheet Exposure Profit before Tax (PLN M, net value) (PLN M) established in 1999 -1% -50% specialised mortgage bank and +1% the largest issuer o
Slide 56: BRE Ubezpieczenia (BRE Insurance)
Summary Appendix Historical view Profit & Loss Balance Sheet mBank Retail Banking Subsidiaries Business Lines BRE Ubezpieczenia (BRE Insurance) Bancassurance Retail Direct Insurance (Internet platform) Gross Written Premiums (PLN M) Gross Written Premiums (PLN M) -51% -7% 3,846.3 153.3 142.8 899.9 3
Slide 57: Detailed Results of the Business Lines: Corporates & Financial Markets
Summary Appendix Historical view Profit & Loss Balance Sheet Subsidiaries Business Lines Detailed Results of the Business Lines Q4/13 Corporates & Financial Markets |57
Slide 58: Corporates and Financial Markets: Summary of Q4/13 Financial Results
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Financial Markets Subsidiaries Business Lines Summary of Q4/13: Financial Results Profit before Tax of the Segment Corporate Branch Network Offices (PLN M, by quarter) Branches +0.5% 48 47 47 47 47 +15.2% 19 18 18 18 18 187.
Slide 59: Leasing and Factoring (Poland)
Summary Appendix Historical view Profit & Loss Balance Sheet Corporates and Institutions Subsidiaries Business Lines Leasing and Factoring (Poland) Leasing contracts Market share & position - 2013 Profit before Tax (PLN M) (PLN M) +11% 6.9% +26% established 2,442 64.4 in 1991 2,199 648 Rank 51.0 18.
Slide 60: Trading and Investment Activity: Market Shares
Summary Appendix Historical view Profit & Loss Balance Sheet Trading and Investment Activity Subsidiaries Business Lines Market Shares mBank’s Market Shares in Investment Banking Services* mBank in the Market for Non-Treasury Debt for Q4/13# (PLN M) 37,787 11.3% 25.5% 22,977 19,151 7,287 5,165 2,899
Slide 61: Dom Maklerski mBanku (mDM)
Summary Appendix Historical view Profit & Loss Balance Sheet Trading and Investment Activity Subsidiaries Business Lines Dom Maklerski mBanku (mDM) Market Shares in Q4/13, by volume Profit before Tax (PLN M) established in 1991 incl. block Session +22% transactions transactions providing a full rang
Slide 62: mBank Analyzer
mBank Analyzer mBank Analyzer Further enhancing our reporting standard Analyse, customise, export and print selected data on mBank Group, covering all periods since Q1/06 in quarterly and annual series Includes FX Comprehensive Summary of Data covering Details on each structure and report on key fin
Slide 63: Contact details
Contact details mBank’s Investor Relations at your service: E-mail address: investor.relations@mbank.pl Wojciech Chmielewski Direct dial: +48 22 829 14 34 E-mail: wojciech.chmielewski@mbank.pl Head of Investor Relations Paweł Lipiński Direct dial: +48 22 829 15 33 E-mail: pawel.lipinski@mbank.pl Deb